ROOH-UL-AMIN KHAN, J:- Through this common judgment, we propose to decide this and the following connected writ petitions, as identical question of law and fact is involved therein. Particulars of the connected writ petitions are given below:-
1. Writ Petition No.1997-P/2019 Messrs Universal Steel Mill v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
2. Writ Petition No. 1998-P/2019 Messrs Umer Stell v . Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
3. Writ Petition No. 1999-P/2019 Messrs Steel Foundry v. Pakistan throu gh Federal Secretary Finance and Revenue Division, Islamabad and others.
4. Writ Petition No.2000-P/2019 Messrs Muslim Steel Mills v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others.
5. Writ Petition No.2001-P/2019 Messrs Lillah Steel Mills v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others.
6. Writ Petition No.2002-P/2019 Messrs Malik Steel Foundry v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others.
7. Writ Petition No.2003-P/2019 Messrs Mustafa Steel v . Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others.
8. Writ Petition No.2004-P/2019 Messrs A. K. Tariq Foundry v. Pakistan through. Federal Secretary Finance and Revenue Division, Islamabad and others .
9. Writ Petition No.2005-P/2019 Messrs Al Raziq Steel Mills v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others.
10. Writ Petition No.2006-P/2019 Messrs Dua Stell Furance v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
11. Writ Petition No.2007-P/2019 Messrs Royal Foundry v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
12. Writ Petition No.2008-P/2019 Messrs Khyber Foundry v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
13. Writ Petition No.2009-P/2019 Messrs MK Steel Mills v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others.
14. W rit Petition No.2010-P/2019 Messrs Shahid Iqbal Steel v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
15. W rit Petition No.201 1-P/2019 Messrs Makka Steel Furnace v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
16. W rit Petition No.2012-P/2019 Messrs MR Steel Mill v . Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
17. W rit Petition No.2014-P/2019 Messrs Al Falah Steel Mill v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
18. W rit Petition No.2015-P/2019 Messrs Mohmand Moulding Workers v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
19. W rit Petition No.2016-P/2019 Messrs Naseeb Steel Furnace v. Pakista n through Federal Secretary Finance and Revenue Division, Islamabad and others .
20. W rit Petition No.2017-P/2019 Messrs MZ Foundry v . Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
21. W rit Petition No.2018-P/2019 Messrs Al Haj Foundry v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
22. W rit Petition No.2019-P/2019 Messrs New Mohmand Steel Mills v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others.
23. W rit Petition No.2020-P/2019 Messrs Gul Badshah Steel Furnace v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
24. W rit Petition No.2021-P/2019 Messrs Daud Steel Fabrication Factory v. Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others .
2. Petitioners, who are proprietorship concerns, having manufacturing Units of Steel Products in the erstwhile Federally Administrated Tribal Area ("FATA") now District Khyber , seek issuance of the following writ:- "To declare that the petitioners are not amendable to pay the impugned taxes, levies and charges along with electricity bills including Income Tax, Sales Tax, Further Tax (FT), Extra Tax (ET) etc for their Industrial Units, situated in the defunct FATA, on the strength/basis of dispensation provided /promised at the time of 25th amendment, therefore, any demand raised by the respondents irrespective of the recent Notification S.R.O.
No.1213(I)/2018 dated 05.10.2018 for the Income Tax and SRO. No. 1212(I)/2018 dated 05.10.2018, for the Sales Tax and any adverse action taken in this respect, be declared as illegal unlawful, without lawful authority and of no legal ef fect; and That the respondents be directed to send electricity bills of the petitioners' Industries without charging the impugned levies, Income Tax, Sales Tax, F-T ax and E-T ax.
Any other relief, if .not specifically asked for by the petitioners".
3. In their respective writ petitions, the petitioners have averred that Tribal Areas Electric Supply Company (TESCO) "respondent No.4", under supervision and control of the Federal Ministry of Energy and Peshawar Electric Supply Company (PESCO) provides and distributes electricity in seven Agencies i.e. the erstwhile FATA, whereas petitioners being its consumers .are regularly paying electricity bills of their Industrial Units. For the month of January , 2019, respondent No.4/TESCO, sent electricity bills of Industrial Units of the petitioners wherein unprecedented heavy and exorbitant amount under the heads of Income Tax, Sale Tax, FC Surcharge, E-Tax (Extra Tax) and F-Tax (further Tax), have been charged without any legal justification. Petitioners emphasize that on 29th May, 2018, a Regulation to provide for' an Interim System of Administration of Justice, Maintenance of Peace and good Governance in the Federally Administered Tribal Areas, "FATA Interim Governance Regulation, 2018", was promulgated, under section 3 whereof, Frontier Crimes Regulation (FCR), 1901 (Amended in 2011), was repealed. On 31st May, 2019, the President assented the Act, namely , "Constitution (Twenty-fifth Amendment)
Act, 2018" promulgated on 5th June, 2018, consequent whereupon, Article 247 of the Constitution was omitted and relevant changes in Article 246 of the Constitution were made. Eventually , FATA/PATA was merged with the Province of Khyber Pakhtunkhwa. Nevertheless, the Members of Majlis-e-Shura and. Provincial Assembly had desired that special incentives and exemptions should be given by the Federal and Provincial Governments to the newly created Districts of defunct FATA for a period of 5 to 10 years. Resultantly , Economic Coordination Committee (ECC ), approved tax exemptions and incentives for the people of erstwhile FATA and PATA for a period of five years so as to also facilitate the general consumers and domestic consumers of electricity . The immunity also includes .the use of Non-Custom Paid (NCP) vehicles for a period of five years ending on 30.06.2023. Here apropos is the SRO No.887(I)/2018 dated 23.07.2018, whereby after clause 143 in Part-I, new clauses 144 and 145 were inserted in the Income Tax Ordinance, 2001, whereby profits and gains derived by individuals, association of persons and companies, inter alia, of the defunct FATA, were exempted from payment of income tax w.e.f. 01.06.2018 to 30.06.2023. Similarly , clause 106 was omitted and new clause 110 was inserted in the Ordinance (ibid), whereby deduction or collection of withholding tax was made not applicable to individuals, association of persons and companies of newly created Khyber District. Petitioners allege that, Income Tax on Steel Melting Units, is charged under section 235-B of the Income Tax Ordinance, 2001, whereas F-Tax and E-Tax are charged under sections 3(1A) and 3(5) read with SRO.509(I)/2013 dated 12.06.2013 of the Sales Tax Act, 1990, respectively . Similarly , Sales Tax is either charged under section 3(1) of the Sales Tax Act, 1990 or under Chapter-XI of the Sales Tax Special Procedures Rules, 2007, issued under the relevant provisions of Sales Tax Act, 1990. The petitioners being manufacturing Units, carrying on business in the vicinities of the erstwhile FATA, in view of the SRO (ibid), are not amenable to levy of any Income Tax or Sales Tax, hence, these writ petitions.
4. The moment, this and the connected' cases were taken up for preliminary hearing yesterday i.e. 02.04.2019, learned counsel for the respondents along with representative of the Income Tax and Sales Tax, came to the rostrum and while accepting notice requested for time to file their respective replies to the writ petitions. Their request was acceded to with the direction to file their comments and also to provide copy thereof in advance to the learned counsel for petitioners, whereas, the cases were posted for today .
5. Arguments of learned counsel for the parties heard and record perused with their able assistance.
6. The epitome of the controversy , involved in the instant cases, revolves around interpretation of "exemption from payment of tax and exemption from certain provisions of tax", now provided to Individuals, Association of persons and Companies, located in the Tribal Areas of Pakistan, (the defunct FATA), as defined by Article 246 of the Constitution. Before discussing merits of the case, it is necessary to mention that before the constitutional (25th Amendment Act, 2018), Income Tax and Sales Tax laws, were not applicable to the erstwhile FATA. However , on omission of Article 247 and changes in Article 246 of the Constitution through the aforesaid amendment, all the laws, including tax laws enforced in the Country , particularly , in the Provinces of the Khyber Pakhtunkhwa and Balochistan, ipso facto, became applicable to the defunct FATA. Since, the Federal Government realized that inhabitants of the defunct FATA needed breathing space for entering into the tax regime; therefore, the already existing constitutional tax immunity was maintained and inhabitants of the defunct FATA were exempted from certain provisions of the Income Tax Ordinances w.e.f. 1st June 2018 to 30th June, 2023, vide two different Notifications of even date i.e. 05.10.2018. The SRO No. 1213(1)/2018, whereby clauses 144, 145 and 110, have been inserted in the Income Tax Ordinance, 2001, is taken for consideration and for the sake of convenience and ready reference, is reproduced below:- Government of Pakistan Revenue Division Federal Board of Revenue **** Islamabad the 5th October , 2018 NOTIFICA TION (Income Tax)
S.R.O. 1213(I)/2018.--- WHEREAS prior to the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018) , the Income Tax Ordinance , 2001 (XLIX of 2001) was not in force in the Tribal Areas as defined in Article 246 of the Constitution of the Islamic Republic of Pakistan, hereinafter called as the Constitu tion , and the levy of income tax was not attracted to the said Tribal Areas; AND WHEREAS Article 247 of the Constitution stood omitted on commencement of the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018) with effect from 31st day of May, 2018 and the Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) stood merged in the Provinces of Khyber Pakhtunkhwa and Balochistan under paragraph (d) of Article 246 of the Constitution; AND WHEREAS on commencement of the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXV II of 2018), the Income Tax Ordinance, 2001 (XLIX of 2001) is in force in the said Provinces including the erstwhile Tribal Areas forming part thereof ; AND WHEREAS a phased approach was needed for the full application of fiscal laws to the said erstwhile Tribal Areas, a decision was made to exempt all persons from levy of income tax which was not applicable to the said areas by virtue of said Article 247 and accordingly Notification No. S.R.O. 887(1)/2018, dated the 23rd July, 2018, was issued by the Federal Government granting exemption from income tax as aforesaid; AND WHEREAS concerns were raised by the trading community of the said erstwhile Tribal Areas to the effect that the aforesaid Notification did not restore the position as existed prior to the commencement of the Constitution (T wenty-fifth Amendment) Act , 2018 (XXXVII of 2018); NOW THEREFORE in order to address the concerns so raised and to restore the position in relation to levy of income tax to the said erstwhile Tribal Areas, and in exercise of the powers conferred by subsection (2) of section 53 of the Income Tax Ordinance, 2001 (XLIX of 2001), the Federal Governm ent is pleased to direct that the following further amendments shall be made in the Second Schedule to the said Ordinance, namely:-- In the aforesaid Schedule-
(a) In Part 1,---
(i) clauses (144) and (145) shall be omitted ; and
(ii) after clause (145), omitted as aforesaid, the following new clause shall be added, namely:-- "(146) Any income which was not chargeable to tax prior to the commencement of the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018) of any individual domiciled or company and association of persons resident in the Tribal Areas forming part of the Provinces of Khyber Pakhtunkhwa and Balochistan under paragraph
(d) of Article 246 of the Constitution with effect from the 1st day of June, 2018 to the 30th day of June, 2023 (both days inclusive); and
(b) In Part-IV -
(i) clause (106) shall be omitted;
(ii) after clause (109), the following new clause shall be added, namely; "(110) The provisions of sections in Division III of Part-V of Chapter-X and Chapter-XII of the Ordinance for deduction or collection of withholding tax which were not applicable prior to commencement of the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018) shall not apply to individual domiciled or company and association of person resident in the Tribal Areas forming part of the Provinces of Khyber Pakhtunkhwa and Balochistan under paragraph (d) of Articl e-246 of the Constitution with effect from the 151 day of June, 2018 to the 30th day of June, 2023 (both days inclusive) . (emphasis supplied).
7. Concerns were raised by the Trading Community of the erstwhile Tribal Areas regarding the abrupt and sudden applicability of taxes in the defunct FATA, where its concept was alien to the inhabi tants. The Federal Government, while realizing the restiveness amongst the bewildered residents of defunct FATA due to abrupt applicability of tax laws, decided to provide a time limit so as to shift them from centaury old system into the constitutional tax regime prevalent in the settled area and so issued SRO No.887 dated 23.07.2018, whereby the following four amendments were made in the tax regime:- i. Business in defunct F ATA shall be registered with the field Officer by 30.09.2018. ii. The person owing business must be a bona fide resident of defunct F ATA. iii. The earning of the person must be from the locality of defunct F ATA; and iv. The registered of the business concern be situated in those areas.
Those qualifying the above criteria were put to exemption through the above mentioned SRO.
8. As is manifest from the record, the Trading and Business community had raise d strong concerns to the effect that above-mentioned SRO is mere an eyewash and is against the spirit of Resolution of the Provincial Assembly as well as assurance of the Federal Government that position regarding taxes in the defunct FATA shall be the same as was prevalent before 25th Constitutional Amendment Act, 2018. Thus, in order to address the concerns so raised and to restore the position in relation to levy of income tax to the said area, the earlier SROs were rescinded.
9. There is no cavil to the legal provisions that before 25th Amendment Act, 2018 and merger of FATA into settled area, the residents and inhabitants of Tribal Areas were enjoying immunity from every kind of tax, either on Person, .Occupier , Company and Properties etc, however , this immunity was done away with by the Constitutional 25th Amendment Act, 2018, whereby Tribal Areas were merged into settled area and all the Federal laws, including tax laws, automatically got extended to the Tribal Areas and as such, the residents and persons carrying on business in the Tribal Areas remained no more immune from the payment of taxes. It is also an undeniable fact that through the above quoted SRO No. 1213, the Federal Government has decided to continue concession to the residents of Tribal Areas by providing breathing space to them to enter into the regime of tax gradually and so they were granted all those benefits, in the shape of exemption from all taxes, which were available to them prior to the 25th Amendment Act, 2018. The legislative intent in this respect is clear than crystal, which denotes in the following phrase of SRO 1213.
"And whereas a phased approach was needed for the full application of fiscal laws to the said erstwhile Tribal Areas, a decision was made to exempt all persons from levy of income tax which was not applicable to the said areas by virtue of said Article 247 and accordingly Notification No. SRO. 887(1)/2018, dated the 23rd July, 2018, was issued by the Federal Government granting exemption from income tax as aforesaid.
AND WHEREAS concerns were raised by the trading community of the said erstwhile tribal areas to the effect that the aforesaid Notification did not restore the position as existed prior to the commencement of the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018).
NOW THEREFORE, in order to address the concerns so raised and to restore the position in relation to levy of income tax to the said erstwhile Tribal Areas and in exercise of the powers concer ned by subsection (2) of section 53 of the Income tax Ordinance, 2001 (XLIX of 2001), the Federal Government is pleased to direct that the following further amendment shall be made in the Second Schedule to the said Ordinance; namely: - The above cited phrases in Preamble of the SRO 1213, indicate the intention of acknowledgement of concerns and strong reservations of business community raised before the Federal Government and most particularly to transform the attitude of inhabitants of FATA phase-wise from century old tribal traditions to perfect constitutional state, hence, it was not a simple exemption to be regulated under section 53(1) of the Income Tax Ordinance, 2001, rather the Federal Government intended to keep the situation intact regarding all the non- applicable taxes as it was existing prior to the twenty-fifth amendment.
10. It transpired from the record that in order to make the Fiscal Laws applicable to the erstwhile Tribal Areas, sale tax Notification No. SRO 888(1)/2018, SRO 889(I) of 2018, and SRO No. 890(I) of 2018 both dated 23rd of July, 2018, were issued by the Federal Government qua exemption of the supplier specified therein from sale tax, but subject to registration of Industrial Units with the Federal Tax Authorities i.e. under section 181 of the Income Tax Ordinance. However due to strong reserv ations and concerns of the Trading Community of the Tribal Areas to the effect that said notifications are not in consonance with the promise made by the Legislative Authority regarding keeping status-quo in the matters of taxes as was existing prior to merger of FATA, subsequent Notifications SRO Nos. 1212(1)/2018 and 1213(1)/2018, were issued whereby earlier Notifications Nos. 888 to 890 of 2018, were rescinded ab-initio and by insertion of section 110 in the 2nd Schedule Part-IV , the provision of section in Division- III of Part-V Chapters-X and XII were made not applicable to the merged area of FATA, for the purpose of collection of withholding tax on the same pattern as it was not applicable to the then F ATA.
11. In the cases in hand, undisputedly , SROs under discussion have been issued under section 53(2) of Income Tax Ordinance, which not only empower the Federal Board of Revenue (with the approval of Federal Minister-in- charge) to exempt any class or classes of persons specified in the 2nd Schedul e from payment of tax, but also empower the Federal Government to exempt any person from the operation of any provision of the Ordinance. For the purpose of clarity , section 53 of Income Tax Ordinance, is reproduced below:- "S.53. Exemption and tax concession in the Second Schedule :-- (1) The income or classes of income or persons or classes of persons specified in the Second Schedule shall be:--
(a) exempt from tax under this Ordinance, subject to any conditions and to the extent specified therein'
(b) subject to tax under this Ordinance at such rates, which are less than the rates specified in the first Schedule, as are specified therein'
(c) allowed a reduction in tax liability under this Ordinance, subject to any conditions and to the extent, specified therein; or
(d) exempted from the operation of any provision of this Ordinance, subject to any conditions and to the extent specified therein ;
(2) The Board with the approval of Feder al Minister-in-Charge may, from time to time pursuant to the approval of the Economic Coordination Committee of Cabinet, whenever circumstances exist to take immediate action for the purposes of national security , natural disaster, national food security in emergency situations, protection of national economic interest in situations arising out of abnormal fluctuation in internationa l commodity prices, removal of anomalies in taxes, development of backward areas implementation of bilateral and multilateral agreements or granting an exemption from any tax imposed under this Ordinance including a reduction in the rate of tax imposed under this Ordinance or a reduction in tax liability under this Ordinance or an exemption from the operation of any provision of this Ordinance to any international financial institution or foreign government owned financial institution operating under an agreement, memorandum of understanding or any other arrangement with the Government of Pakistan, by notification in the of ficial Gazettee, make such amendment in the Second schedule by:-
(a) adding any clause or condition therein;
(b) omitting any clause or condition therein; or
(c) making any change in any clause or condition therein, as the Government may think fit and all such amendments shall have effect in respect of any tax year beginning on any date before or after the commencement of the financial year in which the notification is issued.
(3) The Federal Government shall place before the National Assembly all amendments made by it to the Second Schedule in a financial year". ( emphasis supplied ).
(Subsection (4) and proviso attached thereto have no relevancy with the controversy in the instant case, therefore, are not reproduced).
From the above quoted section of Income Tax Ordinance, it is manifest that exemp tion from tax or exemption from the operation of any provision of the Income Tax Ordinance, may be granted to any person who falls within the domain and regime of Federal Board of Revenue and liable to pay tax. As discu ssed in the preceding Para, the defunct FATAL, after the 25th constitutional Amendment, has been merged into the settled area, and like residents of the settled areas, the inhabitants of merged FATA have entered into the tax regime, thus, they have been held liable to pay all kinds of taxes unless granted exemption from tax or from any provision of payment of tax. It is to be noted that a person exempted under section 53(1) (a, b and c), shall make recourse to section 159 of the Income Tax Ordinance, which provides a mechanism of grant of exemption.
12. No doubt, through SRO No. 1213, sections 144 and 145 of the Income Tax Ordinance have been omitted from the Second Schedule while new sections i.e. 146 and 110, have been added/inserted in the Second Schedule Part- I and Part-IV , respectively . Similarly , through SRO No. 1212, issued under section 13(2)(a) of Sales Tax Act, 1990, the petitioners are found granted exempt ion from whole of the sales tax, by whatever name called. Manifestly , by SRO No.1213, exemption had not been granted to the people of merged areas from payment of income tax, rather they have been exempted from applicability of provisions of Chapter-X and XII of Ordinance. Emphasis supplied to the provision of newly inserted sections 110 in preceding Para, where SRO No.1213, has been reproduced, shall make it abundantly clear that provisions of sections 149 to 158, being part of Division-III Part-V , Chapter-X and sections 231-A to 236-X being part of Chapter-XII, have been made not applicable to the inhabitants of merged areas as was the case prior to the constitutional 25th Amendment Act, 2018, for the purpose of deduction or collection of withholding taxes including tax on electricity consumption, under section 235 of the Income Tax Ordinance. Needless to mention that section 235 of the Income Tax Ordinance, whereby advance tax may be collected on account of electricity consumption, has been made not applicable by the SRO No.1213 to the merged areas. Likewise, vide SRO No. 1212, all types of sales tax recoverable under Sale Tax Act, 1990, have not been made applicable and the residents of the merged areas have been exempted from whole of the sales tax on supply made till 30 June, 2023,
13. The respondents have not denied the exemption granted to the petitioners, however , they have refuted it on the ground that under section 159 of the Ordinance, where a person claims exemption from payment of tax under the provision of Division-II or III of Chapter X or Chapter-XII, he is under obligation to produce "Exemption Certificate " from the Commissioner . The petitioners disagree with the above said contention of respondents and claim that the provision of obtaining an exemption certificate is restricted only to the cases covered under sections 148 to 158 i.e. Division-II and III, respectively or falling under Chapter-XII which run from sections 231-A to 236-X of the Income Tax Ordinance. The petitioners have not been exempted from tax payable under the above mentioned provisions; rather they have been exempted from applicability of the same. "Exemption from payment of tax" is a concession while "Exemption from applicability of provision of Ordinance", is an absolute immunity . In case of exemption, the tax-payer shall require an "Exemption Certificate" while in case of immunity from provision of Ordinance, it shall be deemed that the Ordinance is not applicable to tax-payer . The claim of petitioners is forceful and fully approbated by the SROs under discussion as well as section 159 of the Income Tax Ordinance. Language of SROs is plain, wherefrom it can be easily inferred that the Federal Government has decided to keep away the inhabitants of merged area from burden of any kind of tax for about five years. Likewise, the language used in the main statute i.e. section 159 being unambiguous, is of paramount consideration. Verily, exemp tion enumerated in the second schedule shall be regulated by Part-IV section 159 which provides general provision relating to the advance D payment of tax or deduction of tax at source, for which the commissioner , under circumstances and upon application in writing by the persons seeking exemption, shall issue a certificate of exemption. The said provision of Income Tax Ordinance, read as under "159. Exemption or lower rate certifica te:---(1) Where the Commissioner is satisf ied that an amount to which Division II or III of this Part or Chapter XII applies is:--
(a) exempt from tax under this Ordinance; or
(b) subject to tax at a rate lower than that specified in the First schedule; or
(c) is subject to hundred per cent tax credit under section 100C, the commissioner shall upon application in writing by the person, issue the person with an exemption or lower rate certificate.
(1-A) The commissioner shall, upon application from a person whose income is not likely to be chargeable to tax under this Ordinance, issue exemption certificate for the profit on debt referred to in clause C of subsection (1) of section 151.
(2) A person required to collect advance tax under Division II of this Part or deduct tax from a payment under Division HI of this Part or deduct or collect tax under Chapter-XII shall collect or deduct the full amount of tax specified in Division II or III or Chapter XII, as the case may be, unless there is in force a certificate issued under subsection (1) relating to the collection or deduction of such tax in which case the person shall comply with the certificate.
(6) Notwithstanding omission of subsections (3), (4) and (5) any notification issued under the said subsections and for the time being in force, shall continue to remain in force, unless rescinded by the Board through notification in the of ficial Gazette. " ( Underlines supplied for emphasis ).
14. From bare reading of the above cited section 159 of the Income Tax Ordinance , it appears that an "Exemption Certificate " would be required by the tax payer , where exemption is granted from payment of tax liability to which Division-II i.e. sections 148 to 148-A and Division-III viz deduction of tax at source i.e. from sections 149 to section 158 of Income Tax Ordinance, are applicable or where the provision of Chapter-XII i.e. sections 231-A to 236-X of Income Tax Ordinance, are applicable. In cases in hand, the added clauses 146 and 110 in the Second Schedule of the Income Tax Ordinance, 2001 provide that the provision of section in Division-III of Part-V of Chapter-X and Chapter-XII of the Ordinance for deduction or collection of withholding tax, which were not applicable prior to commencement of the constitutional 25th Amendment Act, 2018 shall not apply to individual domicile or company and association of person resident in the T ribal Area .
15. The petitioners claimed that they have their Industrial Units in the erstwhile Tribal Areas. In their respective writ petitions they have questioned the recove ry of income tax and most particularly the sale tax. According to them the provisions of section-III of PART-V of Chapter-X and Chapter-XII of the Ordinance, for deduction or collection of withholding tax, not applicable prior to the commencement of the constitutional 25th Amendment Act, 2018, shall not apply to the individual or company and association of persons residing in the tribal areas which were not hither to part of the province of Khyber Pakhtunkhwa and Balochistan. The provisions ibid were made inapplicable from 1st day of June, 2018 to 30th day of June, 2023. Similarly , by issuance of the SRO, the tribal areas were exempted from whole of sale tax, by whatever name called, as levied in Sales Tax Ordinance, 1990 or notification issued thereunder . The stated exemption was to carry effect till 30th June, 2023 with an explanation that the same exemption shall be extended to the residents/occupiers of tribal areas in the manner as was the case before the constitutional 25th Amendment Act, 2018.
16. From the above discourse it is barefaced that amendment of Schedule-II, Part-IV by insertion of section 110 through SRO No. 1213, the words "exempted from the provision of the Ordinance " have been specifically used instead of "exemption from tax" enumerated in Division-II and III of Chapters-X and XII of the Income Tax Ordinance. Invariably , the petitioners, having their Industrial Units inside the Tribal Areas, have been given immunity in the shape of exemption, where applicability of Chapters-X and XII, have been excluded for a period of five years. There is no cavil to the proposition that a statute and an enactment are the intention of Legislature, which enact them after having regard to various facts and circumstances prevailing at the time of legislation. It is a cardinal principle of law that interpretation by the Courts shall be done in such a way that intention of Legislature shall prevail and no injustice is accrued to the parties. In other words, it can be said that an interpretation, which makes the enactment a consistent whole , should be the aim of the Court. Looking fairly at the preamble of the SROs and language used therein, one can arrive at an irresistible conclusion that the Federal Government, after merger of FATA into the settled area, had decided that tax laws shall be applied phase-wise to the defunct FATA within a transition period of five years. It is, therefore, that instead of "exemption from tax" the inhabitants of the defunct F ATA were given "exemption from applicability of provision of payment of tax".
17. The upshot of the above discussion is that, the petitioners are not liable to pay any tax which was not applicable prior to the Constitution (Twent y-fifth Amendment) Act, 2018. Consequently , collection of advance tax on the amount of electricity bills of Industrial Units of the petitioners, being in violation of SROs Nos. 1213 and 1212 dated 05.10.2018, is hereby declared illegal. The petitioners are not required to obtain any Exemption Certificate as contemplated under section 159 of the Income Tax Ordinance.
18. This and the connected writ petitions are disposed of accordingly .